Multi-asset fever ends for Hong Kong and Singapore investors

Investors in Hong Kong and Singapore have been increasingly bullish on equity funds over the last year, according to research into recent fund flows by consultant Cerulli Associates, appearing to signal an end to multi-asset fever.

Cerulli indicated that there was evidence from fund flows to suggest that investor interest in two of Asia-Pacific’s most developed markets had shifted from mixed-asset funds to equity funds since June last year. The firm claimed that this might be an early sign of a widely anticipated rotation from mixed assets to equities starting in these markets.

Cerulli said that investors in Hong Kong switched from regular-income, multi-asset funds to slightly more risky equity dividend funds. According to the research, international equity funds were the top-grossing sector in the second half of last year in terms of investment geography, with net subscriptions amounting to US$2.1 billion.

However, Cerulli said optimism should be tempered, as fund flows data for Hong Kong in March this year showed a net outflow from equity funds, with the largest inflow being into bond funds.

"Nonetheless, we continue to believe that equity investments remain on the radar of Asian investors. The withdrawals from equity funds were understandable as news of financial distress in and a softening of China's economy became increasingly visible in March," Shu Mei Chua, a senior analyst with at the consultant, said.